Fusaka Upgrade Weakens Ethereum's Tokenomics, According to Culper Research

• Culper Research has taken a short position in Ethereum, arguing that its post-upgrade tokenomics have deteriorated due to gas fee compression and malicious network activity according to analysis.

• The firm attributes much of Ethereum's transaction growth to address poisoning and dusting attacks, which distort metrics and undermine bullish narratives as reported.

• Culper claims that the gas limit increase in the Fusaka upgrade unintentionally enabled these malicious activities, further weakening Ethereum's flywheel and validator incentives according to their analysis.

Why Is Ethereum's Post-Fusaka Performance Drawing Scrutiny?

• Critics argue that Ethereum's token economics have fractured following the December 2025 Fusaka upgrade, with gas fees falling by over 90% and validator earnings declining as data shows.

• This fee compression is said to have disrupted Ethereum's flywheel effect, reducing validator earnings and discouraging high-value on-chain activity.

• Culper's bearish thesis also challenges optimistic interpretations of Ethereum's rising transaction volumes, arguing that a large portion of the activity is driven by low-value transactions.

What Are the Implications for Ethereum's Long-Term Outlook?

• Culper points to Vitalik Buterin's recent ETH sales as a potential signal of concerns about Ethereum's tokenomics.

• Vitalik Buterin's father has criticized these claims, arguing they misrepresent his son's token sales and underestimate the project's development roadmap according to reports.

• The firm concludes that Ethereum is losing market share to Solana and layer 2 solutions, which could weaken its long-term investment appeal.

• Ethereum faces growing competition from Solana and its own layer 2 platforms, which are increasingly seen as more efficient alternatives as analysis indicates.

• Despite these challenges, some technical indicators suggest a potential near-term recovery for Ethereum, though the structural issues remain unaddressed according to their assessment.

• The debate over Ethereum's future highlights the importance of evaluating tokenomics beyond traditional metrics like transaction volume and network activity.